Protect your kids on Facebook

By Karen Cheney, contributing writerNovember 26, 2010: 5:42 AM ET

(Money Magazine) -- As the movie title suggests, Facebook has become the social network.

Teens are using it for almost every aspect of their social lives, from promoting their relationship status (available), to reporting on last night's party (check out the photos!), to playing games (level up on FarmVille).

But Facebook's popularity has led to some unintended consequences -- risks that could endanger your child's financial well-being and possibly yours as well.

The risk: Identity theft

Most teens post all kinds of identifying information on Facebook, says Jay Foley of the Identity Theft Resource Center. This makes the site a gold mine for ID thieves, who plunder pages for data they can use to apply for loans and credit cards. Scammers also try to get personal details by sending quizzes or games with keystroke collecting malware attached. If your child is using your computer, your data is at risk too.

What to do: Tell your child not to post her full birth date or address, and have her change her privacy settings to "friends only." The default, "friends of friends," exponentially increases the number of eyes that can view her page. Finally, keep your PC's anti-malware software up to date.

The risk: Hurting college and job prospects

Some 21% of schools polled by the National Association for College Admission Counseling said they used social-networking sites to research applicants. And a recent Career-Builder survey found that 45% of employers use sites like Facebook to research candidates; 35% found content that led them to reject a prospect.

What to do: Let your kid know what will make a bad impression such as posts and photos related to sex or drinking, as well as disparaging comments about companies or colleges. Review your child's page periodically, with his permission; urge him to remove inappropriate posts and "untag" himself in unseemly pics.

According to RoiWorld, 43% of teens using social networks spend money on the sites, often to buy virtual items or advance in a game. One Facebook credit costs just 10 cents, "but with these microtransactions, you don't notice how much your kids are spending," says Parry Aftab of WiredSafety.org. Kids can charge credits to a mobile-phone number, or to a PayPal account if they know the password.

What to do: Scrutinize your bills, and never store your PayPal password. Remind your kid that the rules online are the same as off: He needs permission to bill purchases to you. If you do give the go-ahead, make him share the cost which should keep his spending in check.